Logo of jester cap with thought bubble.

Image source: The Motley Fool.

UDR Inc  (NYSE:UDR)
Q4 2018 Earnings Conference Call
Feb. 13, 2019, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the UDR's Fourth Quarter 2018 Earnings Call. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vice President, Chris Van Ens. Thank you, Mr. Van Ens, you may begin.

Chris Van Ens -- Vice President

Welcome to UDR's Quarterly Financial Results Conference Call. Our press release and supplemental disclosure package were distributed yesterday afternoon and posted to the Investor Relations section of our website, ir.udr.com.

In the supplement, we've reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Statements made during this call, which are not historical, may constitute forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met.

A discussion of risks and risk factors are detailed in our press release and included in our filings with the SEC. We do not undertake a duty to update any forward-looking statements. When we get to the question-and-answer portion, we ask that you be respectful of everyone's time and limit your questions and follow ups.

Management will be available after the call for your questions that did not get answered on the call.

I will now turn the call over to UDR's Chairman and CEO, Tom Toomey.

Thomas W. Toomey -- Chairman and Chief Executive Officer

Thank you, Chris. And welcome to UDR's Fourth Quarter 2018 Conference Call. On the call with me today are Jerry Davis, President and Chief Operating Officer; and Joe Fisher, Chief Financial Officer; who will discuss our results, as well as senior officer Harry Alcock who will be available during the Q&A portion of the call.

The five topics I will cover today include a short recap of 2018, our high level 2019 macro outlook, UDR's 2019 strategy, capital deployment opportunities and the senior executive promotions announced early in January. First, we again produced strong results across all aspects of our business during the quarter and for the full year.

Like many REITs, our stock took a wild ride in 2018, but macroeconomic forces remained supportive of apartment fundamentals and our best-in-class operations, diversified portfolio and disciplined capital allocation allowed us to take advantage. We produced sector-leading topline growth, twice raised same-store and earnings guidance ranges and finished the year at the top end of our FFO adjusted per share range.

I would personally like to thank all of our associates for a great 2018. Second, from a high level perspective, we expect 2019 to be relatively similar to 2018, that is solid economics, demographics and fundamental backdrop accompanied by bulks (ph) of share price volatility throughout the year.

UDR tends to perform well in this type of environment. In 2019, we again expect to be near the top of the Group in same-store growth with better flow through to the bottom line as our large developments moved toward stabilization and we take advantage of embedded opportunities like the option asset purchases completed subsequent to year-end.

Should we encounter a different 2019 economic environment, I'm confident that UDR is set up well for success on a relative basis. Third, we do not anticipate any meaningful changes to our overall strategy in 2019. In 2018, we set forth two key areas that would enhance UDR's cash flow growth in the years ahead, being the next iteration of our operating platform and capital allocation that will increasingly be influenced by predictive analytics.

In both, we see the adoption of technology as the disruptive and driving factor. Historically, we have benefited from a number of technology driven initiatives and as a result have fostered a culture that embraces these advances. This is an advantage we will continue to grow moving forward.

Next we have a wide variety of capital sources and uses available to us, but we'll continue to be disciplined in our deployment, internally sourced investment opportunities include fixed price options on recently developed assets, redevelopment densification of our communities, legacy land utilization, revenue enhancing CapEx and investing in our operating platform.

Externally sourced opportunities include development, DCP and acquisition. Year-to-date 2019, we have invested in a variety of these opportunities showcasing the flexibility of our capital allocation strategy as potential uses continue to compete for capital based on risk-adjusted returns and expected accretion (ph).

Lastly, developing talent remains a top priority for myself and the rest of the senior leadership team. The senior executive promotions we announced in January are part of a process that has been gone going for a number of years. Jerry, Andrew, Mike, Matt, Bob and Dave are all deserving of the recognition they have earned, as are all the other UDR associates that have moved up in the ranks.

On a side note, Jerry's promotion to President is not a signal that he is stepping back from operations, but rather that he is handing more of the day-to-day task over to Mike Lacy as he focuses on implementing the next iteration of our operating platform and ensuring strong execution.

I have worked with Jerry for 18 years and Mike has worked with Jerry for 12 of those 18. I look forward to many more. With that, I'd like to again thank all of our associates for the hard work put in to making 2018 another great year. We are excited to carry this success into 2019. I'll turn the call over now to Jerry.

Jerry A. Davis -- President and Chief Operating Officer

Thanks, Tom, and good afternoon everyone. We're pleased to announce another quarter and full year of strong operating results. Fourth quarter same-store revenue and NOI growth rates were 3.7% and 3.4% and full year 2018 growth rates were 3.5% and 3.4% respectively.

For the quarter, our sector-leading results continued to be driven by, first, a widening blended lease rate spread that averaged 110 basis points above last year's comparable period, robust occupancy averaging 96.8%, year-over-year annualized turnover that declined by 130 basis points, other income growth of nearly 12%, year-over-year controllable expense growth that has declined by 1.2% and a continuation of positive trends and move-outs to home purchase and rent increase, both of which remained low at 11.6% and 5.4% respectively.

Moving on, the primary 2019 macroeconomic assumptions that underpin our outlook are, national job growth of approximately 170,000 per month with wage growth above 3%, this compares to 2018 job and wage growth of 220,000 per month and 2.8% respectively.

Next, this is set against a relatively flat year-over-year delivery forecast after potential slippages factored in. And last, B-quality suburban properties are expected to generally outperform A-quality in urban assets. 2019 UDR specific assumptions, which are driven by the macro forecast we utilize and by community specific ground up assumptions are as follows.

Our operating earn-in was approximately 40 basis points higher versus last year. Overall pricing power in the form of blended lease rate growth will be better than 2018. Occupancy is expected to remain in the high 96% range. Other income should continue to grow at high single-digits, but not as robustly as in 2018.

Controllable expense growth is forecast to remain in check due to ongoing efficiency initiatives and the preliminary implementation of operating platform and pre-events (ph). Non-controllable expenses such as real estate taxes will continue to pressure our bottom line due to 421 burn-off in New York and higher valuations in the sorted markets, and same-store community additions for the full year will not materially impact our revenue or NOI growth forecast.

Additions to our same-store pool are available on Attachment 7(B) of our supplement. Also please note, 10 Hanover located in downtown Manhattan and Garrison Square located in Boston are being positioned for redevelopment later in 2019. Their eventual exclusion from the mature pool is contemplated in our full year same-store revenue and NOI growth guidance ranges positively impacting them by 5 basis points and 25 basis points respectively.

Taken together, full year 2019 same-store revenue growth is forecasted 3% to 4%, expense growth at 2.75% to 3.75% and NOI growth at 3.25% to 4.25% which compares favorably versus the peer group and to 2018.

Next, as Tom indicated in his remarks, I've spent a great deal of my time in 2018 and will be spending even more of my time in 2019, implementing the next iteration of our operating platform, ensuring proper execution in the years ahead.

I'm proud of what our operations teams have accomplished over the past ten years with regard to the successes of our top line and expense growth initiatives, both of which expanded our margins significantly. Moving forward, we are working diligently to become even more efficient by centralizing and outsourcing repetitive, non customer-facing tasks at the site level, implementing an enhanced suite of resident self service options available on smart devices and utilizing the internal data, we track to better price our apartments and operate our communities.

While we are embarking on the next phase of our platform now, the answer is threefold. First, our customers are demanding that we conduct an increasing amount of business with them in a more simplified, technologically driven manner, similar to how they conduct business in other aspects of their life. To satisfy these demands, UDR must move more of our day-to-day interaction with residents online, similar to what they did with legacy initiatives, such as online rent payment, service request and leasing, all of which have higher than 80% penetration rates.

Akin to companies that have successfully adopted transformational technologies in other industries, UDR will continue to invest and pivot as necessary to better -- to best serve our resident's needs.

Second, the technologies we will deploy have come a long way and they're generally ready for prime time. Over the coming years, these solutions will allow our associates to perform their jobs more efficiently, by focusing more of their time on value add pursuits, such as improved customer service. And third, we have a culture of innovation and success, wherein we are focused on continued improvement.

In 2019, we intend to invest approximately $20 million on smart home tech, that will start us down this path. These installations will address about one half of our opportunity set, with another $10 million in spend expected to take place in 2020 to round out the majority of our remaining communities. Smart home tech includes smart locks controlled by a mobile device, smart thermostats, water leak detecting sensors and smart light switches.

To date, we have completed 1,800 home installation with rent premiums between $20 and $30 depending on the market, although there are clearly significant benefits to our controllable expenses as well. An additional $30 million investment in other technologies for the overall operating platform will also occur over the next three years.

Some of this will be funded by successful investments and third-party technology firms, such as the one we highlighted on the face of our press release. Ultimately, we envision that these investments will meaningfully expand our margins, make our associates more efficient, make UDR a better place to work and improve our customer's all around experience, through an enhanced resident app, self-guided touring, improved pricing, more efficient workflow and greater resident satisfaction.

To close out this subject, we have consistently improved our platform through the adoption of new technologies over the past ten years, all of which has benefited our customer, the Company and our shareholders.

What I outlined previously in my remarks represents the next step in our evolution. Our Company culture has consistently been one that promotes and rewards innovation, which gives us confidence in our ability to execute, while not taking our eye off of core operations. Moving on, a quick overview of market level growth expectations for 2019. Orlando, Tampa, the Monterey Peninsula, Boston, Seattle and San Francisco are forecast to grow same-store revenue at a rate above the high end of our 3% to 4% portfolio growth range.

We expect New York and Baltimore to come in below the low end. All other markets are forecast to grow top lines within the collars of our portfolio range.

Last, our development pipeline continues to generate strong lease rates and velocities. While the current wave of projects was 85% leased on average at year-end and therefore close to reaching physical stabilization, economic stabilization is still a couple of years away. We are quite pleased with how our lease ups performed during 2018 with 345 Harrison, our 580-home, $363 million project in Boston, Vitruvian West, our 383-home, $59 million project in Addison, Texas, and Vision on Wilshire, our 150 home, $127 million project in Los Angeles, all exceeding the expectations.

In closing, I appreciate the opportunity that Tom and the Board provided me and I would like to thank all of our associates in the field and at corporate for producing another strong year. With that, I'll turn it over to Joe.

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Thanks, Jerry. The topics I will cover today include our fourth quarter results and forward guidance, a transactions update and a capital markets and balance sheet update. Our fourth quarter earnings results came in at the high ends of our previously provided guidance ranges.

FFOs adjusted and AFFO per share were $0.50 and $0.46. Fourth quarter FFOA grew 5% year-over-year, driven by strong same-store and lease-up performance, and accretive capital deployment. Next, I will provide several high-level comments on our 2019 guidance, the details of which can be found on Attachment 15 of our supplement.

Full year 2019 FFOA per share guidance is $2.03 to $2.07 and AFFO is $1.87 to $1.91. Primary drivers of the $0.09 of growth between our 2018 FFOA of $1.96 and our 2019, $2.05 midpoint, include a positive impact of approximately $0.08 from same-store stabilized JVs and commercial operations, a positive impact of approximately $0.05 from development, DCPs and other transactional activity, a negative impact of approximately $0.01 each from higher G&A and the timing drag associated with the recent equity issuance, negative impact of approximately $0.02 from higher incremental financing cost, inclusive of higher LIBOR expectations.

Moving on, as Jerry indicated in his remarks, our full year 2019 same-store growth forecast is 3% to 4% for revenue, 2.75% to 3.75% for expenses and 3.25% to 4.25% for NOI, with forecast occupancy of 96.8% to 97%. For the first quarter of 2019, our guidance ranges are $0.48 to $0.50 for FFOA and $0.46 to $0.48 for AFFO.

Next, transactions. During the quarter we sold Circle Towers, a 46 year-old 604-home community located in the Fairfax County submarket of Washington DC, for $160 million. Subsequent to quarter end, we completed numerous transactions. First, we exercised purchase options on Parallel, a 386-home community located in the Platinum Triangle submarket of Anaheim, California and CityLine II, a 155-home community located in suburban Seattle, for a total cash outlay of $132 million to buy out our JV partner's equity interest and pay out construction debt.

Our total investment in the communities is $184 million, both were acquired at a discount to market value and at a weighted average FFO cap rate of 5.3% on our blended investment. Second, we entered into a contract to purchase Leonard Pointe, a 188-home community located in the Williamsburg neighborhood of Brooklyn, New York for $132 million and a high fours (ph) FFO cap rate, the community is four years old, as operational upside is highly walkable, has easy access to Manhattan via the L-line and Long Island City via the G-line and increases our exposure to a target market.

The transaction is scheduled to close in the first quarter, subject to customary closing conditions. Last, we acquired 500 Penn Street, a development site in the Union Market district of Washington DC for $27 million. We have been working on this deal for nearly three years and are excited about the vibrant, large scale redevelopment under way around the site and we closed on 1590 Grove Street, a development site located in the Sloan's Lake submarket of Denver, which we originally put under contract during the first quarter of 2018 for $14 million.

Regarding development, our pipeline totaled $779 million at year-end, it was 85% leased and 99% funded. We continue to assess new development opportunities, but similar to the past several years remain disciplined in our underwriting. Over the next several years, we anticipate that our pipeline will stabilize at a level below where we have been through much of the cycle likely in the $400 million to $600 million range, which is in keeping with our three-year liquidity profile targets.

On the DCP front, our investment inclusive of accrued preferred return stands at $199 million today. No additional deals were signed during the fourth quarter, but we continue to see a wide variety of opportunities with new and legacy partners. Our 2019 uses guidance of $20 million to $30 million only contemplates funding projects already in our pipeline.

But we have approximately $100 million to $150 million of additional capacity that we can choose to deploy. As a reminder, we have one more fixed price option in the West Coast Development JV, and we'll make a buy-sell decision on it when our purchase window opens in 2020.

On the remainder of the in-place pipeline, we have back-end participation and a seat at the table upon sale. As Jerry indicated in his remarks, we are positioning 10 Hanover located in downtown Manhattan and Garrison Square located in Boston for redevelopment.

We anticipate these projects will both start later in 2019. The total 2019 guidance spend of $25 million to $35 million also includes some smaller scale unit additions at other stabilized properties. Big picture, we have a variety of capital sources and uses with competition taking place within each bucket.

Today, we remain focused on opportunities and redevelopment, development, DCP and acquisitions. Moving forward, we will remain flexible with our deployment and we'll continue to pivot to take advantage of the best available risk adjusted return as long as opportunities meet our hurdles it can be accretively funded.

Next, capital markets and balance sheet. During the quarter, we issued 7.15 million common shares for net proceeds of approximately $300 million. The deal was well executed, priced at a premium to consensus NAV on a net basis, was 25% above the price at which we executed our buyback earlier in 2018 and provided us optionality with regard to asset sales later in the year should we find incremental investment opportunities.

All of the proceeds are earmarked for deployment over the near-term. Also during the quarter we issued $300 million of 10-year unsecured debt at an effective coupon of 4.27% after hedging. Proceeds were used to prepay $196 million of 5.28% secured debt originally scheduled to mature in October and December of 2019 and for general corporate purposes.

As a result, we have a minimal amount of debt coming due in 2019 with cash flow in excess of dividends and cash on hand from our recent equity issuance expected to fund nearly 60% of our uses (ph) guidance.

At quarter end, our liquidity as measured by cash and credit facility capacity, net of the commercial paper balance was $1.3 billion. Our consolidated financial leverage was 31% on an undepreciated book value, 23% on enterprise value; and 28% inclusive of joint ventures. Our consolidated net debt to EBITDA ROE was 5.0 times and inclusive of joint ventures was 5.6 times.

We remain comfortable with our credit metrics and don't plan to actively lever up or down from our average 2018 levels. Finally, in conjunction with this release, the Board approved an annualized dividend of $1.37 per share for 2019, a 6% increase over 2018. The yield as of year-end was approximately 3.5%.

With that, I will open up for Q&A. Operator?

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions). Our first question comes from the line of Nick Joseph with Citigroup. Please proceed with your question.

Nick Joseph -- Citigroup -- Analyst

Thanks. What's the guidance for ancillary revenue growth in 2019 and what was it in 2018 and then how much will it contribute to same-store growth this year versus last year?

Jerry A. Davis -- President and Chief Operating Officer

Hi, Nick. This is Jerry. Last year we came into the year expecting other income to contribute or to grow at high-single digits and it came in just under 12% -- at 11.5%. This year as we go into this year, once again, we think it's going to be single -- high single-digits, with the hope, but not the expectation that it could go higher.

So based on increased penetration in some markets and when you look at the contribution it made to total revenue last year, it was in that 80 basis points to 100 basis point range, and this year it's expected to be probably in the 50 basis points to 60 basis points of revenue growth.

Operator

Thank you. Your next question comes from the line of Rich Hill with Morgan Stanley. Please proceed with your question.

Richard Hill -- Morgan Stanley -- Analyst

Hey, good morning guys. Maybe just following up on Nick's comment there. It looks like at least for the companies that we cover, you have peer (ph) leading same-store revenue growth and same store FFO growth. In the past you've had pretty attractive same-store revenue growth, but the FFO growth has been more in line. So I'm curious how or -- what's driving that FFO growth in 2019, and maybe you could break down the other income, is it development, is it sort of your lending program, how should we think about that?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Yes, hey, thanks. Hi, Richard, it's Joe. Couple of things in terms of what's driving that this year, obviously the core growth as well as the joint venture and commercial is contributing to that year-over-year growth number. But as we came through in last year, remember, we had a $800 million pipeline on the development side, that was really going just into the lease-up phase, so it kind of came off of cap interest, took on full expense load, but we're working up on the occupancy and revenue side.

So that's about a $0.01 drag last year to our run rate and FFO numbers. This year, we think it's probably about $0.02 accretive, so you can add a $0.03 swing if you will year-over-year. In addition, if you go to the DCP pipeline, you look at what Harry and team have been able to do on that front in terms of continuing to deploy capital, that's been accretive for us as well.

And then on the financing front while rates continue to tick higher, we try to get out ahead of some of the prepayment and refi activity and lock in lower rates on that front, which has helped as well.

So overall, you kind of have core (ph) driving $0.08 other transaction activity driving around $0.05, and then you have interest coming of $0.02, as well as G&A in the equity raise has been about $0.01 each.

Richard Hill -- Morgan Stanley -- Analyst

Great. Very helpful color. Thanks, Joe.

Operator

Thank you. Our next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Hi, guys. Just touching on the Brooklyn acquisition, I mean we've seen many of your peers reduce exposure to New York City recently. So clearly taking a contrarian view here and adding exposure, and I guess, I'm just curious, what gives you the confidence in the market, I guess both near-term and longer term given some of the supply challenges we've seen, and then also curious when you underwrote the transaction, if you underwrote it with the L Train being fully shutdown, I guess over the near-term?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Hey, Austin, this is Joe. I will probably start it off and then Harry might be able to speak to some of the specific attributes on the asset sub market returns, but overall with New York, you're right, it is a market, when you look at both (inaudible) and now our 10 Hanover redevelopment, we are looking to get more dollars put to work in that market, while it has lagged of late from a revenue standpoint given the supply picture, we are starting to see that come off. New York will be probably a little bit higher next year in terms of supply, but this is not a one-year trade for us, we're thinking about the next 5 years to 10 years.

And so while supply has dampened our rent growth, when you look at the underlying economic drivers of that market, meaning job growth, income growth, population growth and as well as the diversification of the employment base, clearly getting more technology focused and diversifying away from just kind of fire type of jobs.

We think we're set up to see kind of a mean reversion on the rent growth over the next 5 years to 10 years. So that's what got us positive on that front. So I'll kick it over to Harry and he can probably talk about the deal specifically --

Harry G. Alcock -- Senior Vice President, Chief Investment Officer

Hey, Austin, sure. This is Harry. The property just first of all is -- we think is very well located in the North Williamsburg area of Brooklyn, a blog from McCarren Park, it's really an established residential neighborhood even though the property is only three, four years old, away from the glut of new supply in Downtown Brooklyn and the Williamsburg waterfront. It really is very difficult to get density in this neighborhood. The property has been fully occupied for two years, has a 25 year tax abatement, fully abated until 2036 and you mentioned the L Train when we contract it, put this property under agreement, the L Train was still supposed to be taken offline entirely during the due diligence process, you saw the news that there will still be the L-line -- L Train will still continue to run, but you know there's, our initial underwriting contemplated the L Train stopped entirely, today we're in the circumstances which should be positive.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Great, thanks guys.

Operator

Thank you. Our next question comes from the line of Trent Trujillo with Scotiabank. Please proceed with your question.

Trent Trujillo -- Scotiabank -- Analyst

Hi, good morning and congrats, Jerry and all the other team members on the recent promotions. Just thinking about other markets. You also recently commented on the attractiveness of Philadelphia and how you're looking to expand your presence there.

So, since we're coming off of the NMHC conference, I'm curious if you've surfaced any opportunities to act on this.

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Yes, hi Trent, it's Joe. We did do the DCP deal, that we talked about last year, 1300 Fairmount for around $52 million or so. It is a market we want to continue to gain more exposure to for some of the reasons we've talked about in the past, coming out of NMHC, you know, there's always plenty of deal flow coming out of that, but we have been looking, not just on the DCP side, but we're looking at development opportunities there to try to rebuild that pipeline. We're looking at acquisition opportunities as well. So to the extent that we can find something that we think is going to be accretive, not just near-term, but to a longer-term growth. And then also have the ability to lay on the operational platform that Jerry spoke to in his opening remarks, and also put in some more initiative penetration, I think there is an opportunity for the platform to drive outsized revenue growth there as well.

So we are looking, I think the good thing about the equity offering that we did in December, it created a lot of optionality for us around transaction, so that we can consider instead of just using dispositions or removing dispositions from the plan, we now have the opportunity to drive -- how (ph) to drive some additional FFO growth for the platform going forward.

Trent Trujillo -- Scotiabank -- Analyst

Okay, great. And then just a quick follow-up, in the prepared comments, I think you mentioned that you expected B-quality assets to outperform A in 2019, can you maybe talk about the magnitude of that performance gap, how it compares to 2018, and if you expect that gap to trend in a particular way during the year?

Jerry A. Davis -- President and Chief Operating Officer

This is Jerry. In 2018, I think across our portfolio it was probably 75 basis points to 100 basis points of outperformance. I think as you go into this next year, we would expect it to be roughly in that same magnitude, maybe a bit tighter, but not materially different.

Trent Trujillo -- Scotiabank -- Analyst

Thank you very much. Appreciate it.

Operator

Thank you. Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Please proceed with your question.

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Good afternoon, guys. Jerry, when you're putting together your same-store revenue range for '19, which markets you and your team think had the widest band of likely outcomes in -- for 2019 and if one market falls short of your '19 expectations, when we're speaking a year from now, which market do you think that's likely to be?

Jerry A. Davis -- President and Chief Operating Officer

Probably the ones with the largest ranges are the ones that have the heaviest amounts of supply, but you know what, we're really looking at that determines the ranges is job growth in those markets. So three that really jump out are Seattle, New York and San Francisco. We expect Seattle to be a good performing market this next year, but a lot of it is contingent upon continuation of job growth. Same is true in San Francisco, New York probably (ph) It's going to be one of our lower-performing markets, we still expect it to be almost a 100 basis points, improved revenue growth from last year. So we've been encouraged recently, Joe was going through some of the attributes that we saw in the Brooklyn deal, as we look at more recent rent growth there, as you see in our supplement on Attachment 8(G) new lease rate growth in the fourth quarter was 1.5%.

That compares to a company average of 1% and actually in the month of January, new lease rate growth was 1.3%. So we're encouraged by New York today, but we are cognizant that depending on job growth, it could change, and then the fourth market that you have significant amounts of new supply, none of it's -- not much is in our backyard is the LA. LA, I would say just always has a little bit of risk for us on the same store side because three of our four same-store assets are located in Marina del Rey.

So we have that kind of a concentration, if the development that is coming out goes a little crazy on lease up concessions it can affect us, I guess there was one I look at that could surprise to the downside and this is probably just looking more at a conventional opinion, Seattle. We feel like our Seattle portfolio, well, it's heavily located in Bellevue and Bellevue is -- West Bellevue is not going to have that much new supply, if you do feel concessionary problems come for both Redmond, where supply is going to be heavy or downtown, it could affect us.

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Okay, thanks guys.

Jerry A. Davis -- President and Chief Operating Officer

Sure.

Operator

Thank you. Our next question comes from the line of Rich Hightower with Evercore ISI. Please proceed with your question.

Rich Hightower -- Evercore ISI -- Analyst

Hey, guys. How are you?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Hi Rich.

Rich Hightower -- Evercore ISI -- Analyst

Good. I'm going to do a quick question here on the smart home technology investment that you described in the prepared remarks. I'm just curious how you guys think about that (Technical Difficulty) and given the plethora of options, probably available to a Company like UDR and how you pick among vendors and think about potential obsolescence over the next several years as new technology comes down the pike and then also how do you get to that $20 to $30 rent premium you described, how do you measure that exactly?

Jerry A. Davis -- President and Chief Operating Officer

Yeah, Rich, this is Jerry. I'd say, we did look at a lot of vendors and we've participated with one that we have a lot of confidence in, the Company has success with other installations, historically most predominantly in the single-family home industry. When you look at the return, we measure the return and it's about a 12 to 13 IRR based on about a 6, 6.5 year life on its investment.

We think there is also, as I said in my remarks, benefits on the expense side. One of the key features of this is leak detectors, and as you know in high rises as well as garden communities, water damage can be very expensive. So catching it early, drives down insurance cost as well as our NIM. We think by having these electronic locks, it saves our maintenance team's time and responding to service request as well as just having to change out locks, also cuts down on over time, because we don't have to come out and do lock out for residents.

So there's quite a bit of benefit on the expense side too. When you look at the $20 to $30 premium, we're going to add that to the rent. So we will be able to measure what our spread in the rents was before and after installation compared to the market to ensure that we're getting that benefit. I can tell you as I said in my opening remarks, we've sold almost 2,000 of these, the response from the residents has been very positive.

I think a lot of them already had things like Amazon Echos in their apartments, that they're tying into the system to help make it work, I think they see the convenience factors especially on the locks to be able to open them remotely from their mobile device when they have friends, dog sitters, people like that coming to their houses, I think for single parents, or parents in general, that have school-age kids, they get home from school, you get a notification when the door opens.

So it gives you that kind of a calmness that your child has returned home. Overall, we think it's a big benefit for the resident. We think there's a significant benefit to us, we realize that technology does change, but we think this technology is cutting-edge and should last at least to 6, 6.5 years, before we have to reinvest.

Rich Hightower -- Evercore ISI -- Analyst

Okay, that's helpful color. Let me ask you another question, the UDR, I think at least among your public peers as far as I can tell has been, I don't know if you want to call it at the forefront, but fairly active and rigorous in pursuit of sort of the data analytics side and how you select markets for investment in the future and New York is a market that you guys have described as maybe being a contrarian play, Philly I think was one that's doing well and your -- according to your methodology as well, but are there other markets out there, and I don't want to give away the playbook, but other markets that sort of screen (ph) well from a contrarian perspective versus what the consensus view on that given market might be today and where you guys might differ?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Hi, Rich. There definitely are other markets that we are actively looking in and trying to deploy capital into. So I think as you look forward to our actions over the call it the next 12, 24 months you'll probably see the fruits of those labors. So I think you'll see where we're trying to go. From a sourcing standpoint, yeah, there is markets that may not screen as well for us, but keep in mind, there's always asset specific, submarket specific, tax specific as well as CapEx reasons that you may want to sell an asset.

So I'd say our disposition strategy is probably a little bit less focused on the port strat (ph) work, will still use it as a factor, but there are a lot of other factors that come into it, whereas the deployment of obviously in personnel resources and capital resources is a lot more focused across the board.

Richard Hill -- Morgan Stanley -- Analyst

Okay. Thanks, Joe.

Operator

Thank you. Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your question.

Jeffrey Spector -- Bank of America Merrill Lynch -- Analyst

Thank you. Good afternoon. Just maybe if we could start with the macro, I heard Tom say that the macro remains supportive and we're getting lots of incoming calls, questions on just the macro. From again, just to confirm, from what you're seeing whether it's web traffic, right now I guess, all indicators are showing that in your markets, the macro environment remains stable good?

Jerry A. Davis -- President and Chief Operating Officer

Yeah. This is Jerry, I would tell you when you look at total income growth for our market it's screening higher than it is for the country in general, you know at over 6% total income. We expect job growth when you look at, we've built up some of our budget and planned expectations.

We do see job creation coming down somewhat to probably about 170,000 jobs per month. But we do see an increase in wage growth in our markets. So you've got that and on the supply side, I don't think we're seeing a whole lot different than our peer set. I think overall, we see, you know, slight increase in supply next year and it deviates market by market.

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Hey Jeff, this is Joe. Maybe just a couple other things as it relates to our capital allocation thoughts too on that front. While we do see a positive macroeconomic backdrop you have seen a lot of activity out of us in the first quarter as well as the intent to rebuild that pipeline on the development side, roughly half of where it's been most of the cycle.

I don't want you to take away from that, that we are overly bullish or risk on from a cycle standpoint or that we have adjusted our underwriting or discipline around that by any sense. It's really just a byproduct of a couple of things, those being, one, timing and you've seen the two options from Wolff that started back in 2015 coming to fruition, the Union Market land that started three years ago, Denver, that started over a year ago.

So some of this activity is just simply a byproduct of timing of a lot of these deals come to ahead at once, as well as the optionality that we talked about that the equity offering gave us kind of go out there and think about where we can deploy capital to increase the growth rate. So don't take our comments on macro and the recent activity to think that we are overly bullish on where we're going to, that we're switching to a risk on posture.

Jerry A. Davis -- President and Chief Operating Officer

Jeff, that being said, we've got January in the books and when you look at new lease rate growth in January, it was at 0.9% which is you know, comparable to what it was in the fourth quarter and it's about 120 basis points on the new lease side higher than where we were last year.

So you've got that on top of 96.8% physical occupancy. So we're off to a good start this year.

Jeffrey Spector -- Bank of America Merrill Lynch -- Analyst

Great, thanks all very helpful comments. And then just one other question on expenses. I know you said, real estate taxes, of course will continue to pressure overall expenses, but the rest remain in check, can you confirm the predictive analytics that you're referring to, are you using that for the expense controls, because you seem to be doing a better job than your peers on that front?

Jerry A. Davis -- President and Chief Operating Officer

No, we're really not utilizing the predictive analytics, but you know, I think on the expense side, what you've seen is us really get a start on this operating platform that we discussed in the prepared remarks, and I think when you look at how we've done in the fourth quarter, our controllable expenses, which are everything except real estate taxes and insurance were down 1.4%.

You're going to see an increase in repairs and maintenance, but a pretty good decrease in personnel, and that's really a function of us outsourcing more pieces of our business to more efficiently drive down the total cost structure. So I think a lot of what we've done so far is related to outsourcing and centralization of certain functions to become more efficient.

I think we've improved some of the analytics we use on the marketing side, I think we've on the utility side done a very good job of putting in more energy efficient lighting and other tools, and I think you're going to see those continue. So while we are still expecting real estate pressures next year, it'll come down somewhat from what it was this year.

But our expectation is those controllable expenses stay in check probably close to flat as we look out into 2019, and I think as we continually drive down our margin through this new operating platform, it's going to help our existing portfolio, but more importantly, it's going to give us a platform so that when we're looking to make other investments in the future, whether it's acquisitions or developments, you're going to see better flow through on those and more value creation.

Jeffrey Spector -- Bank of America Merrill Lynch -- Analyst

Great, thank you.

Jerry A. Davis -- President and Chief Operating Officer

Sure.

Operator

Thank you. Our next question comes from the line of John Guinee with Stifel. Please proceed with your question.

John Guinee -- Stifel -- Analyst

Great, thank you, and a wonderful job. I'm just trying to drill down a little bit more on the CapEx spend, if I look at Attachment 14, you had about 2,300 a unit for capitalized expenditures on consolidated homes, if you add tax spend to that or maybe you have already, what's your tax spend per unit for the next few years, and then if you look at redevelopment, a good run rate for the redevelopment, which isn't adding to your unit count, but it's just a major overhaul of a project, how much whole dollars should we expect to spend or you expect to spend on technology as well as the redevelopment?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Hey John, this is Joe. Just on the return about enhancing (ph) that $2300, that does not take into account the spend for the new platform, so the spend that Jerry has referred to on that front for the technology spend will be separately categorized from this, and we'll provide that guidance.

You can see back on Attachment 15 where we provide overall guidance for the platform spend of $25 million to $35 million this year. That's for both the technology spend as well as the smart home spend that you referred to. So that's going to be separate from this. What we're trying to show you on Attachment 14 is really the recurring CapEx required for the business to drive that NOI. So that's what the recurring number should be.

John Guinee -- Stifel -- Analyst

And then on redevelopment, you've got $25 million to $35 million. How many units is that and are you adding any units when you redevelop, spent $25 million to $35 million on redeveloping existing properties?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Yeah, there is a couple of different buckets in there, Harry or Jerry can probably go into some of the details, but the $25 to $35, it's not a set level that we try to get to each and every year. It's opportunity dependent as those opportunities come along. So in this case, we talked about Hanover as well as Garrison that is embedded in this, but that'll be a multi-year spend, so it'll drag over a couple of years, and we'll provide more disclosure going forward as those deals start about what the total expectations of spend are, the completion dates, etcetera.

In addition to those larger type of products or projects you're going to see densification opportunities, (Technical Difficulty) additions creative things that we're trying to do to take advantage of underutilized space. So taking underutilized amenities or garage space trying to add units into the project, so that spend will be embedded in as well.

John Guinee -- Stifel -- Analyst

Great. Thank you very much.

Operator

Thank you. Our next question comes from the line of John Pawlowski with Green Street Advisors. Please proceed with your question.

John Pawlowski -- Green Street Advisors -- Analyst

Thanks. Jerry, thanks for the comments on 10 Hanover and Garrison impact the same-store. Could you provide the same-store revenue and NOI impact for all changes, net additions and subtractions to the same-store in '19?

Jerry A. Davis -- President and Chief Operating Officer

That's pretty much what it is, when you really looked at the other additions and there weren't any, it really didn't have any effect on it.

John Pawlowski -- Green Street Advisors -- Analyst

Okay. And then on property taxes outside of California and New York, where there's pretty good visibility, what regions are you expecting the most pressure on property tax growth rates in '19 versus '18?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

You know that it is probably the same ones that we're going to see the pressure and that would be Florida, Texas, Seattle would be the heaviest pressure points.

John Pawlowski -- Green Street Advisors -- Analyst

All right. Last one from me, Joe. I understand you're comfortable with the credit metrics if GSE reform becomes more real at any point would you try to get to an improved credit ratings, to try to get your unsecured cost down?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Hey, John. I would honestly say that the GSE reform aspects and our credit rating desire to move up in credit rating are probably independent of each other as we have traditionally been a unsecured borrower and had very competitive cost of capital on that front as a triple B plus. And so we've gone through that whole analysis of if we tried to do upgrade on rating, what we'd have to give up in terms of a deleveraging, and what the dilution would be to that, and to date we have not been able to make sense of upgrading and trying to offset that with multiple as we don't think our multiple has been impaired due to our credit profile.

I do think if the GSEs do tend to reform and/or go away, like the important considerations are when you look at us as a public company like you said, we do have a lot of different sources of capital. In addition, when you look at our asset base, which is a higher quality asset base, which is typically not as levered in the private market we are probably more insulated as a public Company relative to the private market from any impact of the GSEs.

John Pawlowski -- Green Street Advisors -- Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from the line of Tayo Okusanya with Jefferies. Please proceed with your question.

Tayo Okusanya -- Jefferies -- Analyst

Yes, good afternoon. Most of my questions have been answered, but I just had one quick follow-up, a comment you made -- that you made earlier on about the development fee inclusive physical stabilization, but several years before they had (ph) economic stabilization, I was wondering could you talk a little bit about that because I would have thought things like what was -- what I am thinking about, discounts and things like that to kind of come off fairly quickly. I'm just surprised, it doesn't have such big time difference between physical stabilization and economic stabilization.

Jerry A. Davis -- President and Chief Operating Officer

Well, this is Jerry, and Joe may want to jump in or Harry, when you think about physical stabilization, you complete the project obviously and then you start to lease up throughout, but frequently that first year of lease-up, you're offering anywhere from a month to maybe a month and a half of concession. You also have extensive marketing cost during that time frame. So that's physically stable, but not economically stable as you get to that next year, the next turn of leases, typically the concessions go away or for the most part go away and the marketing spend comes down dramatically.

That's when you start getting more of that full stabilized yield.

Tayo Okusanya -- Jefferies -- Analyst

Got it. Okay. That's fair enough.

Jerry A. Davis -- President and Chief Operating Officer

Thank you.

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Thanks, Tayo.

Operator

Thank you. Our next question comes from the line of Alexander Goldfarb with Sandler O'Neill. Please proceed with your question.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Hey, good morning out there. Just two questions. First, on the JV same-store pool, the KFC and the Hanover or I guess, MetLife, the same store NOI has been -- was negative last year, and I'm just curious is this -- I know that few years ago, you spoke about the rent levels of those properties being high end maybe was problem pushing rents, but can you just talk about the performance of those assets, and do you think that they will start to match your overall same-store trends or you think that it's just something specific about where they are, where they are positioned in the market that they will continue to underperform?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Yeah, I think, at least in -- or in 2019, our expectation is revenues probably going to be about 100 bps lower than what our same-store pool would be, so call it 2% to 3% and yeah, that's predominantly because they're in urban areas with high A plus products. So they are competing more than our average portfolio against new supply.

Expense growth is going to be more elevated too, more in the 4% to 5% range, predominantly due to real estate tax issues that are affecting that, but you should have this next year positive NOI somewhere in the 1% to 2% range. So they will not do as well as our same stores.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Jerry, are you thinking about keeping those longer-term or those are future assets to sell?

Jerry A. Davis -- President and Chief Operating Officer

You know, I'll start and these guys can jump in. I think this is just a temporary issue as we go through supply absorption, we've been going through it for the last year or two, but we like these assets, we like the locations and the product type. It's just the time -- the time in the cycle where a new supply has come into those more urban submarkets.

So it's not making us want to flee those assets.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay. And then on the second question, Wall Street Journal article B (7) today highlighted that number of municipalities state contemplating different rent measures including here in New York that looks like it could target all apartments, not just the rent stabilized, what are your thoughts on some of these proposals, especially here in New York and are you -- with these proposals are they affecting the way that you think about underwriting the markets or in your view this is all normal course as you've operated in markets over time, there's always a stuff and it's just something that is part of the underwriting mix or is something shifting this time as you guys observed?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Hey Alex, it's Joe. I would say, first off from a national basis, and that applies to New York as well, when we think about the affordability issues that exist out there, we continue to not believe that's further regulations or compression on rents or caps on rents, is probably the appropriate path forward to try to get new supply and new affordability out there.

So hopefully we get to a point where we can all work kind of collectively, where it's going to position once and get to a better place, but given our desire to be in New York that's independent of the rent control issue or rent stabilization issue that's out there today. We have spent a lot more time thinking about this going through and looking at the rhetoric that's out there, some of the commentary as well as looking back at past attempts of regulation to understand where this could potentially go going forward.

I do agree that we've seen a couple of comments out there of market wide rent stabilization talks mainly from (inaudible), but I think most of the other rhetoric out there is really targeting the rent stabilized piece, and so when we look at that when you kind of look at New York overall, it's important to keep in mind, a couple of facts, which are 50% of the market is market based units where the other 50% is effectively rent stabilized and a small portion of that is rent control.

For our portfolio pro forma for the Leonard acquisition will be about 80% market rate and 20% rent stabilized. So I do think to the extent that anything happens on the rent stabilized side, it will stand to benefit the market rates, so we should see better rent growth, better, better -- forward rent growth valuations just given supply will probably back off a little bit.

The other thing for the rent stabilized piece, you know, whether something happens there with better oversight of legal rents, CapEx, rent stabilized or preferential rents, you'll likely do still have a economic return and probably a lower volatility return. So it's something we're focused on, something we're thinking about. We factored it into a downside and a (ph) write-in (ph) in for Leonard to try to think about what could be a worst-case scenario if we went very Draconian and we still thought given the probability of that happening, it made a lot of sense moving forward to that deal.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay. Thank you, Joe. Helpful.

Operator

Thank you. Our next question comes from the line of Hardik Goel with Zelman & Associates. Please proceed with your question.

Hardik Goel -- Zelman & Associates -- Analyst

Hey guys, thanks for taking my question. I actually just wanted to ask you about the progress you've made on the expense side and you know, what we can expect in the future as you look across the different lines, Jerry, you talked a little bit about how the platform investments over time will help with the cost structure as well. Do you see that more on the repair and maintenance side or the personnel side, are you able to be more efficient with the number of employees per building or things like that? Just some more color on those items.

Jerry A. Davis -- President and Chief Operating Officer

Yeah, it's exactly what you said. I think you're going to see the blend between R&M and personnel, I think we're going to be able to continually run at either flat to slightly negative, just like we did this year as we create more efficiency, both on the cost structure as well as the workflow.

So, but I would guess, as you look forward to next year, you're going to see R&M probably inch up a little bit higher, but you're going to see personnel cost come down even though you're going to have wage inflation across our markets, three plus expense, our expectation is on natural attrition. We'll look for opportunities to be more efficient and outsourced or centralized. And I think you're going to see the personnal come in, probably lower than most of our competitors.

Hardik Goel -- Zelman & Associates -- Analyst

Also on the utilities line, do you think there's potential especially with the buildings becoming more monetized as we go through at least on a newer product there is potential for these sensors and other technology investments to kind of reduce those costs as you manage the utilities for the monetized (ph) or common spaces better?

Jerry A. Davis -- President and Chief Operating Officer

Absolutely. I think when you look at common area, electric or gas and the temperatures that are in the hallways or other common areas, we definitely have room for improvement there within our Company and I think when you look at that as well as again LED light fixtures, we're looking at solar, I'm not sure if we'll move forward with that, but we're looking at all kinds of opportunities to reduce any of the cost structure in the business that doesn't impact our residents.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Got it, thanks so much. That's very helpful.

Jerry A. Davis -- President and Chief Operating Officer

Sure.

Operator

Thank you. Our next question comes from the line of Haendel St. Juste with Mizuho. Please proceed with your question.

Haendel St. Juste -- Mizuho -- Analyst

Hey there. I'm sorry if I missed this, but did you mention specifically what the real estate tax growth outlook embedded in 2019 same-store expense range is and I guess as part of that, how much of an assumption is embedded specifically from the 421, tax abatement pressures in the New York portfolio and how long or approximately how many years of a headwind should we expect in tax abatement to be?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Hi Haendel, for real estate tax next year, we think it's probably going to come in somewhere in the 7% to 8% range, if you look at what's really driving that, Jerry mentioned a couple of the markets already, but specific to 421, and I'll expand that to redevelopment impact too from View 34, but 421, we just have 95 Wall in the same-store pool going forward next year, it's about a $700,000 impact on real estate taxes, which with over $100 million are kind of in that 70 basis points type range for impact.

In addition, when you look at View 34, the big redevelopment that was completed several years back, the impact of that is flowing through into the valuations and therefore the real estate tax on a five-year average basis, and so that one has cost us another 150 or so basis points on real state taxes as well. So if you're kind of at that 7.5 midpoint, our true unadjusted number is probably more in that kind of 450 basis point, 500 basis point growth range.

Haendel St. Juste -- Mizuho -- Analyst

Okay. I appreciate that. And then it sounds like we're at the front end of the tax abatement headwind close (ph) approximately how long should we expect this to be a head wind, approximately?

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Across the platform, we really only have two large 421 projects, it's 95 Wall and then 10 Hanover. As we talked about in the past, I think last year it was about $1.3 million, the collective impact this year will be about $1.8 million and then we actually peak out in 2020, just over $2 million. So we are actually coming up on the -- into the kind of 421 headwind and then it will start ramping down from there.

Harry G. Alcock -- Senior Vice President, Chief Investment Officer

Haendel, I'm not sure if -- this is Harry, if you were asking about the new acquisition at Brooklyn, but that has a 25 year tax abatement, it's fully abated until 2036 and then there is a five year bleed in.

Haendel St. Juste -- Mizuho -- Analyst

Okay, that's helpful. Thank you. And then a follow up on the ancillary revenue. I am just kind of curious how much more of an opportunity is there? It sounds like maybe a more, but should we explore (ph) from the deceleration in this year, that the opportunities have been pretty much maxed out and will be on the vein (ph) going forward and maybe if you could perhaps share some thoughts on perhaps the additional ancillary income levers beyond maybe the in-home technology that you're looking into, that you can pull, that can be incremental to your revenue over the next few years?

Jerry A. Davis -- President and Chief Operating Officer

Sure, Haendel and I would say that as -- the technology won't go into ancillary income, that will be added as rent growth and when you look at the impact of the smart homes, it's probably 10 basis points to 15 basis points of our revenue growth this year, but it's going to be more in the rents, but when you look at the ancillary income again, last year it grew at call it 11.5%. This year like I said, we expect it to be high-single digit, although we wouldn't be surprised if it -- it got back up to low-double digits depending on success of continuation of parking, as well as the short-term furnished rentals.

So we're still growing that at multiples above what rents are growing. So while it's slowing a bit or expected to slow a bit, it's still going to be a strong contributor, one other avenue that we started getting some traction on last year that we expect to grow this year are renting out to the third parties our common areas that are utilized frequently, especially during daytime hours to businesses. Last year with a modest contribution of, call it $0.5 million.

We think that this year is going to at least double and we think it's a platform that we started out in the West Coast and it's moving eastward. So I think there is potential for that to grow and I will tell you, we're constantly looking for additional avenues to grow other income through pieces of our real estate, outside of our core apartment units.

So while those are the items that are on the list today, I'm confident over the next couple of years, we'll continue to reload.

Haendel St. Juste -- Mizuho -- Analyst

Great. Thank you for that.

Operator

Thank you. Our next question comes from the line of Daniel Bernstein with Capital One. Please proceed with your question.

Daniel Bernstein -- Capital One Securities, Inc. -- Analyst

Hi. Good afternoon. In NMHC there was a lot of talk about co-living, co-working and so I just want to understand maybe what issues you have on those and how you are incorporating that into your business model over the next couple of years?

Jerry A. Davis -- President and Chief Operating Officer

Yes, we've looked and talked to people about co-living. We really haven't implemented anything to date, we haven't had occupancy pressures, where we felt that it was something that was necessary, but it is something we'll continue to study, I do think when you look at the economic reasons that certain individuals moving to co-living situations as well as social side of it, I think it's something that you could see less and Harry may want to talk a little about one of our DCP deals in Philadelphia, where they're actually going to have some co-living space.

So we are seeing examples of new developments that are being actually (inaudible) for co-living and not just concluded, existing apartment units and I think by us, being an investor in this deal, we will be able to actually watch it and see the benefits and some of the cons as they do their lease up and managing that, so, Harry, anything you'd add?

Harry G. Alcock -- Senior Vice President, Chief Investment Officer

Yes, the DCP deal you're talking about is in Philly, it's near Temple University, about 25% of the 400-plus units are allocated to co-living, and they kind of created a separate little area within the building, within the property to accommodate these. We'll see how that plays out over the next 18 months to 24 months as the developer completes construction and we go through lease-up.

Daniel Bernstein -- Capital One Securities, Inc. -- Analyst

Okay. So it's not -- if you are looking at it, it's not playing a huge role yet within the construct of your properties?

Jerry A. Davis -- President and Chief Operating Officer

I would say, right now, it's not playing any role, but it is something where --

Daniel Bernstein -- Capital One Securities, Inc. -- Analyst

Okay. One last quick question if I could, predicting job growth is probably like predicting the weather, I'm not going to hold you to the 170,000 a month, but I was trying to understand, within your guidance to occupancy and rate growth, is there some range of job growth you're contemplating and historically, you look to back it, the growth of the economic cycle, is there some place 100,000 jobs a month, 50,000 jobs a month, where you start seeing some more impact on occupancy, if the economy does slow down.

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Yeah, hey Dan. So when we go through kind of the overall budgeting process, it's a dual -- it's like a two-like approach from top down and bottom up. So bottom up in the field is really based on what do they see as competitive supply, what are the recent rent trends that they have and what's going on from a demand side within their markets.

So that's really how you get to the midpoint and of course, we overlay what we see coming from a overall top down supply and demand standpoint, and we make sure that we feel comfortable with those forecast as well and work with them on kind of refining it. But then the range is around it. There isn't any easy one to one type of relationship that you can kind of come up with and say 50,000 jobs down, here's what it does to revenue, because it is so micro-oriented, in terms of in sub-markets asset, et cetera.

So we really don't have the math that kind of takes you up and down to the high-end where we can say 170,000 is base case, but if we went to 120,000, here is where it goes.

Daniel Bernstein -- Capital One Securities, Inc. -- Analyst

Okay. I appreciate it.

Operator

Thank you. There are no further questions in the queue, I would like to turn the call back over to Chairman and CEO, Mr. Toomey for closing remarks.

Thomas W. Toomey -- Chairman and Chief Executive Officer

Thank you. And a quick wrap up. First, thank you again for your time and interest in UDR. We started off the call with a recap of 2018 which was a great year for us, as well as our view of 2019, which we anticipate to be very similar to 2018 and we're off to a very good start.

It's been a very good rewarding 45 days into the year and with that, I'd like to again thank all our associates for all the hard work they've put in and continue to do every day. Take care.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Duration: 71 minutes

Call participants:

Chris Van Ens -- Vice President

Thomas W. Toomey -- Chairman and Chief Executive Officer

Jerry A. Davis -- President and Chief Operating Officer

Joseph D. Fisher -- Senior Vice President, Chief Financial Officer

Nick Joseph -- Citigroup -- Analyst

Richard Hill -- Morgan Stanley -- Analyst

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Harry G. Alcock -- Senior Vice President, Chief Investment Officer

Trent Trujillo -- Scotiabank -- Analyst

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Rich Hightower -- Evercore ISI -- Analyst

Jeffrey Spector -- Bank of America Merrill Lynch -- Analyst

John Guinee -- Stifel -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

Tayo Okusanya -- Jefferies -- Analyst

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Hardik Goel -- Zelman & Associates -- Analyst

Haendel St. Juste -- Mizuho -- Analyst

Daniel Bernstein -- Capital One Securities, Inc. -- Analyst

More UDR analysis

Transcript powered by AlphaStreet

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.